Demand fluctuation, tenant retention, and soaring costs drive significant challenges for both residential and commercial rental landlords. As a landlord, setting affordable yet competitive rates and creating a well-facilitated space for tenants is paramount to success.
So, what’s the best way to maintain this balance?
Read on as we summarize modern impacts on the rental industry, and describe four key strategies that could help you meet the demands of the current landscape.
Technology, commercial opportunities, and the renter’s needs significantly impact the rental industry. Here’s how:
Although proximity to community hubs, grocery stores, and parking remains essential, an increasing numbers of renters are moving to suburban and rural locations - here’s why:
You can protect yourself during this shift by investing in residential and commercial property; diversifying your portfolio reduces the risk of financial loss and maximizes income and improves your ROI.
Understanding trends in the rental industry can help you develop strategies that make your property a prosperous source of income capable of withstanding significant adjustments in the future. Here are five strategies to consider:
Modern amenities offering security, supporting daily living, and facilitating new work habits are key to building an appealing listing. Here’s a breakdown:
Background screening helps landlords evaluate tenant’s ability to place on-time payments, treat the property respectfully, and comply with the tenancy agreement. Checks evaluate a tenant's:
Streamline the process and protect users’ information using highly-rated digital screening services like RentPrep; results help you assess the risk associated with each tenant. For example, data can help you determine whether a tenant has sufficient funds to cover the rent, or the likelihood of losing a primary income stream based on employment patterns.
While the worst is thankfully behind us, it’s good to keep the effects of the COVID-19 pandemic in mind; around 8.8 million renters fell behind on payments because of rapidly increasing costs and limited access to workplaces.
Although inflation dropped by over 3% between 2022 and 2023, it’s still double the average pre-pandemic rate of 2.6%. These figures mean renters are seeking longer-term properties where they’ll stay.
Maintain the property by doing the following:
Between tenancies create a home inspection checklist, preventing oversights on the property’s structural integrity, warmth, and ventilation, for example.
Connect with trusted contractors who can visit your properties at short notice to display quick incident response time. Fixing issues at the root cause could also save you money in the long term; patch-work means the problem is likely to return at a later date, causing frustration among your tenants.
In many states like New York and Indiana, you can raise the rent as often as you like, although some regulations require at least 30 days of written notice if costs rise by 5% or more.
If you want to raise your costs without deterring your tenants, consider raising them alongside the inflation rate. When looking for new tenants, review seasonal changes; peak demand usually occurs between May and September. Here, your higher prices are competitive, but demanding tenants are more willing to pay.
In the current economic climate where interest rates are notably high, landlords with buy-to-let portfolios need to be shopping around and comparing buy to let portfolio mortgages on the market - you can’t afford to be paying higher rates with the current economic squeeze.
Use a good mortgage broker if you’re unsure.
Given the high interest rates, even a slight difference in percentage points can significantly impact your bottom line. You can either choose to consolidate their portfolio with a single lender who offers a competitive rate, or strategically split their properties across multiple lenders to capitalize on the best rates for different types of properties.
Regularly reviewing your mortgage arrangements and comparing different options is never more important than in a high-interest environment.
Current trends and statistics show renters seek longer-term accommodation with contemporary facilities supporting high-level security, functional appliances, and healthy living conditions. The pandemic’s effect on work habits has influenced renters’ needs, so adjusting your properties to meet demand and ongoing maintenance and responsive communication is key to tenant retention.